Louisville KY Aug 5 2012 Interest on decades of underpaid pensions for a group of more than 100 retired firefighters will cost Louisville taxpayers $7 million as of July 31 — and is accruing at $2,300 per day, according to calculations made by the firefighters’ attorney, Ann Oldfather.
Oldfather shared her calculations with Louisville metro government officials Thursday, saying they were based on a rate of 12 percent, set by Jefferson Circuit Judge Mary Shaw.
Rick Evans, an attorney working for Oldfather, said the firm is waiting for a handful of its clients to give final approval of the calculations before they enter a request for judgment with Shaw, who ruled June 29 that the city owed the money and set parameters for how the interest would be calculated.
Evans said the motion should be filed by the end of September. “We’re just trying at this point to let the city know about our calculations and be open about it,” he said.
Bill Patteson, a spokesman for the Jefferson County attorney’s office, confirmed that Mayor Greg Fischer’s administration has decided to appeal Shaw’s ruling — a decision that will delay the final outcome and could end up costing taxpayers more money.
Fischer spokesman Chris Poynter said the city carefully considered several issues in deciding to appeal, including that losing the case will cost taxpayers substantially more money in accruing interest; that the city has lost every major ruling in the firefighters’ lawsuits; and that it has already paid out more than $71 million — a total that doesn’t include Oldfather’s latest calculation.
“We think the judge was wrong in the ruling,” Poynter said. “Our legal team weighed this appeal very carefully, because we know we have not been successful in the past. But we believe we have a pretty strong case.”
Poynter wouldn’t say whether the city agrees with Oldfather’s calculation, but he has acknowledged in the past that the sum for which the city could be liable is “significant.”
A $3 million surplus is built into this year’s city budget, but this judgment would wipe that out. And the surplus is important because Fischer has twice dipped into the city reserves — for a combined $11.3 million, all of which was needed to pay firefighter judgments.
The dispute arose in 2000 when firefighters filed a complaint with the Kentucky Labor Cabinet challenging the way the city calculated overtime. They claimed they were underpaid because money for longevity, training and clothing was not figured in as part of their base pay, upon which overtime is calculated.
The firefighters have won at every stage in two separate court cases. A group of 834 firefighters, represented by a Washington, D.C., law firm, entered into a $45 million settlement with the city in November 2009. That settlement covered all attorney fees, interest and pension shortages; the city borrowed the money to pay it.
Then the group represented by Oldfather won a judgment of $14.2 million to cover back pay. The city borrowed $10 million from the Louisville Water Co. and paid the rest from its reserves. Months later, the city had to pay Oldfather $1.2 million to cover her fee. That money came from the city’s Vehicle Replacement Fund.
Earlier this year, the Fischer administration entered into a $10.8 million settlement with the Kentucky Retirement Systems over interest income it lost because the city had underpaid into the system for the 123 firefighters.
KRS interim Executive Director Bill Thielen made it clear to council members that none of that money would go to firefighters, saying the system needed the money to cover future benefits to the retired firefighters. Then Shaw ruled that firefighters are also owed interest on their underfunded pensions.
Oldfather also represents another group of about 100 retired firefighters who are just starting to litigate over the same issue.